Chapter 5 Vocab

Code of conduct a statement that guides the ethical behavior of a company and its employees
Checking account- a bank account from which payments can be ordered by a depositor
Endorsement- a signature or stamp on the back of a check transferring ownership
Blank endorsement- an endorsement consisting only of the endorsers signature
Special endorsement- an endorsement indicating a new owner of a check
Restrictive endorsement- an endorsement restricting further transfer of a checks ownership
Postdated check- a check with a future date on it
Bank statement- a report of deposits, withdrawals, and bank balances sent to a depositor by a bank
Dishonored check- a check that the bank refuses to pay
Electronic funds transfer- a computerized cash payments systems that uses electronic impulses to transfer funds

Debit card- a bank card that, when making purchases, automatically deducts the amount of the purchase from the ch
Petty cash- an amount of cash kept on hand and used for making small payments
Petty cash slip- a form showing proof of a petty cash payment

or by a bank

mpulses to transfer funds

nt of the purchase from the checking account of the cardholder

Chapter 5 Outline Cash Control Systems

Part I Checks
A. Signature Card Contains authorized signatures
B. ABA Number (American Banking Association) to identify the bank that the

check was drawn from. (Banks

C. Three types of endorsements:

a. Blank Signature only
b. Special Transferring a check to somebody else (Ex. Pay to the order of -other name- )
c. Restrictive (stamp) for deposit only to the account of other partys name
D. Preparing a check stub:
a. Amount of check ($)
b. Date
c. To Whom
d. Purpose
e. Amount of check
f. New Balance
E. Preparing a check:
a. Date
b. To Whom
c. Number Amount
d. Written Amount (prevails over numeric amount within $10)
e. Purpose
f. Signature

Part II Bank Reconciliation

A. Difference between bank record and checkbook:
a. service charges or interest
b. outstanding check
c. outstanding deposit
d. error
B. Reconciling a bank statement:
a. Left side:

1. Checkbook balance
2. Deduct bank charges
3. Add interest
4. Figure out new balance

b. Right side:
1. Bank statement balance
2. Add outstanding deposits
3. Deduct outstanding checks (checks that the bank has not yet received)
4. Figure out new balance

**Canceled checks have not effect on the bank rec form they have already been received by the bank and retu
C. Recording a service charge on a check stub:
1. write service charge
2. write amount to the service charge
3. calculate new check book balance
D. Journalizing a service charge:
1. Date
2. Debit Misc. Expense
3. Credit Cash
4. Source Doc. Memo
**No check is written for the service charge the bank automatically deducts it from the account**

Part III Dishonored Check and Electronic Banking

A. Reasons for a dishonored check: (a check the bank refuses to cash)
1. Post Dated Check
2. Amounts Dont Agree
3. Not an Authorized Signature
4. Stop Payment on Check
5. Altered Check
6. Insufficient Funds
B. Recording a dishonored check on a check stub:
1. Date
2. To Dishonored Check
3. Write Amount / Calculate New subtotal

C. Journalizing a dishonored check:

1. Date
2. Debit Account Receivable
3. Credit Cash
4. Source Document Memorandum

D. Journalizing a Electronic Fund Transfer (EFT) or debit card purchase:

1. Date
2. Debit Account Affected
3. Credit Cash
4. Source Doc: Memorandum

Part IV Petty Cash

A.

Petty Cash - Asset

DR
+
BAL

CR
--

B. Establish Petty Cash Fund:

1. Date
2. Debit Petty Cash
3. Credit Cash
4. Source Doc: Check
C. Petty Cash Slip:
1. Petty Cash Slip Number
2. Date
3. Write whos taking money
4. Why
5. The Amount
6. The Account Affected
7. Signature

D. Petty Cash Proof:

1. Cash Remaining
2. Petty Cash Slips
3. Equals Original Amount
E. Replenish Petty Cash: (End of month or when becomes low)
1. Date
2. Debit Account Affected
3. Credit Cash
4. Source Doc: Check

heck was drawn from. (Banks ID #)

n received by the bank and returned to the customer**

rom the account**

Page

4
Date
2014

Apr.

2
2
3
3
29
30

Journal
Account TitleDoc No
AP-Jackson M120
Group
AP-Delite Drums
M121
Supplies
M122
Petty Cash C150
AP-Bank
M123
Petty Cash C151
Supplies
Miscellaneous Expense
Postage Expense

Post Ref

Debit

General
Credit
560
675
165
100
7.5
16
25
17.5

Sales
Credit

Debit

Cash
Credit
560
675
165
100
7.5
58.5

BANK RECONCILIATION
CLIENT NAME: Pinkerton Academy
BANK: TD Bank

MONTH OF:
ACCOUNT NO. : 1111111

CHECKING
ACCOUNT BALANCE...............................
ADD:
Interest
Errors

TOTAL ADDITION:
0.00
TOTAL.............................................
LESS:
Auto Withdrawals
Bank Fees
Errors

1231.34

1231.34

9.00

TOTAL SUBTRACTION:
Adjusted Checkbook Balance
CHECKS:
NUMBER
100
102
103

9.00
1222.34

AMOUNT
132.50
85.00
125.00

NUMBER

TOTAL

342.50

TOTAL

CONCILIATION
Nov-14

O. : 1111111
BALANCE PER BANK STATEMENT
AS OF:
ADD DEPOSITS IN TRANSIT:
OD
300.00

TOTAL IN TRANSIT
300.00
TOTAL...................................................

LESS CHECKS OUTSTANDING:

(SEE LIST BELOW)
TOTAL..................
342.50
Adjusted Bank Balance

AMOUNT

NUMBER

1264.84

1564.84

1222.34

AMOUNT

TOTAL
0.00 GRAND TOTAL

0.00
342.50

Page

8
Date

Journal
Account Title
Application 5-3

General
Doc No

Post Ref

Debit

2014
Jan

25 AR- Ralston Eubanks

26 AP- Reed Rosman
27 Supplies

M333

155

M334

289

M335

54

C527

300

C555

57

Application 5-4
2014
Nov

5 Petty Cash
30 Supplies
Miscellanious Expense

58

Postage Expense

10

Repairs Expense

40

General
Credit

Sales
Credit

Debit

Cash
Credit

155
289
54

300
165